Variations in State Financial Provisions Some of the problems encountered in financing schools in a number of States are the result of inadequacies or inequities in State financing provisions. A number of States still use flat grants as the major method of distributing State funds. The flat-grant method provides the same amount per pupil or per some other unit regardless of the wealth or ability of the school system in which the children live. While such financial assistance helps to relieve the burden on property taxes, it does not recognize that districts vary greatly in ability to support schools and that the least wealthy districts need far more financial assistance than the most wealthy. A few States have developed a plan for financing schools that includes a relatively large number of special-purpose funds which can be used only for a designated phase of the educational program, such as transportation or vocational education. The establishment. of several such funds tends to complicate the problem for the local school systems. They find themselves restricted by the types of aid provided when planning their program. Furthermore, these funds may have the effect of overemphasizing certain phases of the program and underemphasizing others, thus dividing interest and generally handicapping local school systems. In a number of States, laws provide rewards for all small schools and small districts, thus tending to perpetuate uneconomical and inefficient practices. A few States penalize all small schools and districts regardless of sparseness of population. More recently a number of States have developed procedures for determining which small schools are isolated and for providing special financial adjustments to help meet the needs of those schools. A few States have established comprehensive foundation programs which are reasonably consistent with the basic principles of school finance. Most States, however, have relatively unrealistic programs in that some essential services are not included, the level of support is inadequate, or the measure of local effort is based on assessed values which may not have a uniform ratio to the actual value of property. Eight States have neglected to include any provision in the State finance program for transportation, and several others have provisions which handicap schools in sparsely populated areas. While about one-half of the States have recognized that many local school systems cannot finance needed school buildings entirely by local funds, many of these have given but little financial help for construction. A few have established a continuing program of financial assistance or loan-grant plans for districts with urgent needs. Three States have developed a State building authority for constructing buildings and renting them to needy districts. It is evident that the State plan for financial support in many States is the result of a patchwork system of amendments and compromises and seriously needs to be improved. Unrealistic Limitations In a number of States, constitutions and statutes prevent local communities from having the schools they are fiscally able to provide. Laws which place unrealistic limitations on the amount of taxes people may vote tend to interfere with local initiative and responsibility. A few States have rigid limits on taxes which may be levied for all local governmental purposes, including schools. Several have authorized separate levies for schools, but have prescribed limits which cannot be exceeded under existing conditions regardless of the needs of the schools and the willingness and ability of the people to meet them. A number of others have established limits which may not be exceeded by action of the board of education, but which the people may vote to exceed at their discretion. In most States the authority of the voters in local school systems to approve the issuance of bonds to finance the construction of school buildings is limited to a prescribed percentage of the assessed valuation of property in the districts. Two States have a 2-percent limit. The most common limits range from 7 to 15 percent. However, the assessed value in many school systems is only a small fraction of the actual value of property, and the ratio often varies markedly from district to district in the same State. Thus these limits are not only unrealistically low in terms of actual values but are, in many cases, inequitable because of the varying assessment ratios. It is significant to note that a few States have equalized, or made substantial progress toward equalizing assessment ratios. At least three have prescribed that bonding limits are to apply to the full rather than to the assessed value of property. A few, by providing continuing grants against which loans may be made or by developing loangrant plans, have effectively removed borrowing capacity from assessed valuation and related it more directly to needs. Other types of limitations which handicap local school systems in some States include voting restrictions and complications relating to required election procedures which make it difficult for some districts to increase school revenues or vote bonds. Range in State Ability and Effort The States still vary widely in wealth per child of school age. The income of the people per child of school age in 1940 was six times as much in the wealthiest State as in the State of least wealth, and in 1953 the ratio was about 4 to 1. Between 1940 and 1953, the four least able States increased 306 percent in income per child of school age, and the four wealthiest States increased only 155 percent. However, in dollar income, the four least able States increased $2,733 per child, while the increase in the four most able States was $6,958 per child. These calculations are in terms of gross dollar increases unadjusted for differences in the purchasing power of the dollar in 1940 and 1953. Increases in income in terms of adjusted dollars are presented in tables 6 and 7 at the end of this section of this report. The school revenue available per classroom unit in 1953 ranged from $2,404 in one State to $10, 182 in another State. The national average of revenue available per classroom unit was $7,025. The State of least wealth in 1953 would have had to use 8.08 percent of the total income of the people for public schools if that State had provided as much revenue per classroom unit as the national average. The average State provided revenues for the public schools equal to 2.72 percent of the income of the people. The State making the greatest financial effort allocated 4.18 percent of the total income of its people to the support of its public schools, and the State making the least effort allocated only 1.90 percent of its total income for public schools. However, the State making the least financial effort to support its public schools provided for 19.70 percent of its children in nonpublic schools. Therefore, the range in effort among the States to support education is not as great as it would seem. Federal Aid to Education At the present time, the Federal Government provides about 3 percent of the revenue available to the public schools. This aid is limited to certain special purposes such as vocational education, school lunches, and aid for districts in federally impacted areas. Numerous proposals have been made for increasing the participation of the Federal Government in the financing of the public schools. Few persons interested in the financing of education are neutral on the subject of Federal aid. Generally, they divide into three groups: those who favor Federal aid for all States, for some States, or for none at all. The first two groups subdivide still further as to the purposes for which Federal aid would be made available and the method of apportioning it. No matter how we differ on these subjects, most people agree that they do not want Federal control of our schools. Some insist, however, that the Federal Government must exercise enough supervision over any aid provided to insure its use for the purpose intended, but they reject any Federal control over the curriculum. Some ask, If the children in the States of least wealth are to have adequate educational opportunities, what alternative to Federal aid is available? Those concerned about the legal obstacles to greater State and local support for schools ask, can Federal aid be provided in such a way that it will encourage rather than discourage State and local efforts to eliminate these obstacles? Numerous arguments have been advanced for and against Federal aid for the public schools. The controversy usually focuses on the difference in financial ability among the States and the possibility of Federal control. These arguments will not be reviewed because they have already been presented in numerous published sources.1 Many opponents of Federal aid argue that none of the States should receive Federal aid for schools. A majority of this Committee is not persuaded by those arguments because the evidence is clear that a few States are so lacking in economic ability that they cannot finance an adequate system of public education without a tax effort which would be so excessive that it might retard economic development. The evidence indicates that differences among the States in economic ability are declining but that large disparities still exist, and at the present rate of progress it will take some years for them to disappear. We do not believe that adequate educational opportunities should be denied to the children of any State if the people of that State make every reasonable effort and fail solely because of lack of fiscal ability. If it can be assumed that good schools foster the economic development of a State, then the improvement of schools in the States of least wealth seems mandatory. The long-range goal of any Federal aid which may be provided for schools is to eliminate the necessity for such aid. Many advocates of Federal aid argue that some of the States—those of least economic ability-should receive financial assistance from the Federal Government. This Committee is not persuaded by this argument because the school building emergency is so extensive that no State or Territory escapes it. While it may be that there is in some States a political determination sufficiently strong to overcome obstacles which now prevent needed school construction, most States, under their present constitutional and statutory limitations, are unable to use their fiscal resources in time to house many of the children now enrolled. This Committee believes that Federal aid for school construction should be made available on a limited basis to all States and Territories and the District of Columbia to help overcome the present school building emergency. It believes, also, that Federal funds should be provided under the philosophy of encouraging greater use of State and local funds for school purposes. We believe that the best schools can be produced by continuing to assign to the States and local districts primary responsibility for financing, organizing, administering, and controlling the public schools. The Committee believes that 1 See "Federal Educational Activities and Educational Issues Before Congress," a report prepared in the Legislative Reference Service of the Library of Congress by Charles A. Quattlebaum. U. S. Government Printing Office, Washington, D. C., 1951. Federal aid to all the States can be justified, however, only on a temporary basis to meet an emergency situation such as the present school building emergency. Educational Needs and Resources School enrollments have been mounting rapidly during recent years because of the rising birthrate and the increased public demand for education. School costs have risen rapidly, but the national income has gone up at even a more rapid rate. It has been estimated 2 that the children of school age will increase 34 percent between 1954 and 1965 and that the gross national product will increase 44 percent between 1953 and 1965. This is equivalent to an estimated annual increase of 3 percent in school-age population and 3.7 percent in gross national product (using 1954 and 1953 as the base years for comparisons). It appears that the Nation as a whole will have the fiscal capacity to finance an increase in both quantity and quality of education. Since the Nation has the overall capacity to finance the kind of schools the people want and need, it remains only to propose a plan by which this can be accomplished. Evidence available to this Committee shows that almost threefourths of the States, containing 77 percent of the Nation's children, have the fiscal capacity at the present time to finance educational programs equivalent to the present national average of $7,000 per classroom unit without being required to make an unreasonable tax effort. This statement is based on the assumption that a tax effort for the public schools equal to 4 percent of income payments to individuals is not an unreasonable tax effort. During the school year 1953-54, 11 States provided revenue receipts for the public schools ranging from 3.60 to 4.18 percent of the income payments to individuals. There is no evidence available indicating that tax effort for schools at that level has retarded the economic development of those States. The evidence also shows that if all States would raise their educational revenues to 4 percent of their per capita income, 40 of the 48 States would have in excess of $6,000 per classroom unit and 44 of the States would have in excess of $5,000 per classroom unit. North Dakota would have $4,982, Alabama $4,800, Arkansas $4,588, and Mississippi $3,478. (See col. 7 of table 1 on p. 63.) The evidence also shows that the States of least wealth are rapidly increasing in fiscal capacity, and it does not seem unreasonable to anticipate that the number of States with low fiscal capacity will be considerably reduced in future years. However, a few States may lack the fiscal resources to finance adequate school systems without excessive tax efforts for some years to come. National Citizens Commission for the Public Schools, "Financing Education in the Decade Ahead," 2 West 45th St., New York, December 1954. 379439°-565 57 |